How much do I need to retire? This guide will provide a clear path to retiring comfortably in Georgia, living on a guaranteed fixed income stream for the rest of a retiree’s life. You will learn how to:
- Take the guesswork out of retirement income planning.
- Solve for your fixed income amount.
- Increase your retirement income up to 24% by reducing tax liability.
- Efficiently structure your income from 3 different retirement plans.
This retirement income planning guide is ideal for
- Georgians don’t want to spend less money when they retire but maintain or improve their current lifestyles.
- Retirees know they’ll have to budget their savings and are looking for the best way to invest for income.
- Those who want to simplify their income problem by expecting a monthly paycheck as if they are still working.
- Consumers want more income than a CD but want the guarantees that come along with them.
The key to a comfortable retirement is laying a foundation for a fixed income to pay for essential monthly expenses as if you still were employed. Any investments outside the desired monthly paycheck are secondary.
The goal is to achieve your desired fixed income with the least amount of money, leaving the remainder of your retirement savings for vacations, luxuries, investments, and emergencies.
- If you are far from retirement age, read Empower Retirement.
- If you are nearing or currently in retirement, read: How Long Will My Money Last in Retirement?
To retire comfortably in Georgia starting today, you will need to save at least $120,000.
Here’s how we came to this amount.
The Cost To Retire in Georgia
One must understand the statistics to understand how much it costs in Georgia.
Cost Of Living
According to the U.S. Census Bureau, the median monthly cost for rent or mortgage in 2019 is
- Mortgage: $1,417.00
- Rent: $1,006.00
The estimated monthly expenses for a couple in Atlanta are $2,046.80.
The inflation rate is currently at 2.8%.
Is Retirement Income Taxable in Georgia?
- Federal Taxes: Between 12% and 24% on average.
- State Income Tax: Up to 5.75%
The Cost of Healthcare
The cost of Medicare starts at $148.50 a month and can reach up to $504.90 per month.
The Cost of Long-Term Care
In 2020, the average cost of care per year in the state of Georgia was
- Homemaker Services: $48,048
- Home Health Aide: $49,192
- Adult Day Care: $16,260
- Assisted Living Facility: $42,000
- Nursing Home Semi-Private Room: $80,665
- Nursing Home Private Room: $86,082
In Georgia, the average cost of a traditional funeral is $4,500.
Georgia State Tax Guide for Retirees
- Social Security benefits are state tax-free, and up to $65,000 of most retirement types is exempt for people age 65 or older ($130,000 per couple).
- For those ages 62 to 64, the maximum state tax exemption is $35,000.
- Examples of retirement income include pensions and annuities, interest, dividends, net income from rental property, capital gains, royalties, and the first $4,000 of earned income (such as wages).
- The statewide sales tax ranges from 4% to 4.9%.
- The state of Georgia does not tax Social Security benefits.
- No estate or inheritance tax for Georgia retirees.
- Vehicles purchased on or after March 1, 2013, are not charged an annual vehicle tax or fee.
How Do We Generate a Guaranteed Income?
To create a fixed income, one must utilize a few retirement tools to create a guaranteed lifetime income. These tools are:
- Social Security Income: The average SSI paycheck in 2021 is $1,543 a month (per person).
- Roth IRA Annuity: Provide a monthly paycheck for life, tax-free. Retirement income increases up to 24%.
- Non-Qualified Annuity: Provides a monthly paycheck for life; only the interest earned is taxed.
By utilizing these three income sources, a retiree could collect a monthly paycheck for life and reduce their tax bill, leaving more money for savings to pay for long-term care costs.
What if I don’t have a Roth Annuity or a Non-Qualified Annuity?
If you’re nearing retirement, you might not have these options for your income planning.
You can roll over a 401(k) or transfer an IRA to an annuity, just like the other two retirement plans. However, you will be taxed on the total income amount versus none or a portion of your income from the Roth or non-qualified annuity.
Solving For Fixed Income
Based on the estimated monthly expenses, housing, and Medicare, a household (2 people) would need to generate the following per month to pay for the essentials.
- Total Monthly Expenses with a Mortgage: $3,612.30 a month
- Total Monthly Expenses With Rent: $3,201.30 a month
You will need a few sources of income coming in monthly to pay for these costs:
- Social Security Income: A couple would bring in an average of $3,086 per month.
- Level Income Annuity: $120,000 in retirement savings would generate an additional $500.00 a month for life.
- Increasing Income Annuity: $140,000 in retirement savings would generate an additional $500.00 a month for life and increase overtime to help with inflation.
Note* The annuity premium amounts can be lower depending on age and the amount of time deferring in the annuity before starting the income stream. The longer you wait to begin the guaranteed lifetime income, the less money is required to generate the desired income amount upfront.
You can find your Georgia Social Security Administration office here.
How To Pay for Long-Term Care in Georgia
Above, we mentioned the median costs of long-term care services and facilities in Georgia are costly. A long-term care annuity will offset these costs in the future. Let’s see how much retirement savings would pay for these services and facilities.
Purchasing a Long-Term Care annuity with a portion of your retirement savings could quickly offset these costs. Most LTC annuities double or triple your investment to pay for these costs, tax-free, freeing up more of your retirement savings and fixed income that generally would pay for these expenses.
- Nursing Home (Private Room): $175,000 (Preferred) and $262,500 (Standard)
- Home Healthcare: $100,000 (Preferred) and $150,000 (Standard)
- Assisted Living: $85,000 (Preferred) and $126,000 (Standard)
How to Pay for a Funeral in Georgia
The average cost of a funeral in Georgia is $4,500. Burial Insurance (final expense) can offset these costs. A burial insurance policy can cost as little as $48.85 monthly for a $10,000 benefit at age 62. You can reduce that cost and get a $25,000 benefit by purchasing a 20-year term life insurance policy for as little as $27.27 a month.
How To Start Retiring Comfortably
- Calculate your essential monthly expenses.
- Subtract those expenses from your Social Security income.
- Request a quote for the remaining amount.
- Pick out your annuity and apply.
- Start the income at your targeted retirement age.
- Live comfortably.
Hopefully, this guide has clarified how much money is needed to retire comfortably in Georgia. The next step is to find out how you can turn your savings into a guaranteed fixed income stream for life. Fortunately, we at The Annuity Expert have plenty of experience helping people do just that. We would happily provide you with a quote based on your unique situation. So please, don’t hesitate to reach out and contact us today!
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